Drug Prices

Sen. Richard Burr’s Love Affair with Big Pharma: The Ghost of Billy Tauzin

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These are unique times we’re living in, so before I criticize this guy for his Big Pharma love, I feel compelled to hand him a well-earned compliment: Senator Richard Burr (R-NC) acted heroically in voting to impeach former President Trump in the wake of the violent January 6th assault on Congress. Whether or not you agree with Burr’s vote, history shows politicians rarely cross the aisle to impeach someone in their own party. Senator Burr’s vote was courageous. I stand by that even though he decided not to run for re-election in 2022.

People (like me) often accuse politicians of carrying water for Big Pharma so that they will receive large campaign contributions from the industry. During Sen. Burr’s last campaign in 2016, he received over $200,000 in campaign contributions from drug companies. These contributions contributed to him receiving an F grade on drug prices on the Prescription Justice Congressional Report Card. Even though he is not facing an election in 2022, Sen. Burr continues to espouse public policy beliefs and talking points of the multinational pharmaceutical industry. So maybe he is genuinely a believer in the pharmaceutical industry being able to charge anything it wants for life-saving medications because that’s the business model supposedly supporting wonderful advances in biomedical research. Maybe.  

I read in STAT News that during the Senate Committee Health, Education, Labor and Pensions (HELP) hearing dedicated to questioning California AG Xavier Becerra, President Biden’s nominee for Secretary of the Department of Health and Human Services, Sen. Burr, the ranking member, was strongly critical of Becerra. Specifically, Burr went after Becerra for supporting an interpretation of the Bayh-Dole Act that would allow the government to override a patent on a drug developed with U.S. taxpayer funding viewed to be exorbitantly priced and allow the manufacture of lower-cost generic versions:

“American innovation and ingenuity are rescuing us from the devastation of a global pandemic…Your actions as attorney general for California and your tenure in Congress reveal somewhat of a disregard for the value of this ingenuity, calling for policies that undo decades of investment in and support of Americans’ biomedical research.”

Apparently, Sen. Burr believes that drugs developed with our money should still be priced out of our reach. Or maybe he’s looking at his exit strategy and thinks that continuing to drink the Kool-Aid will pay off. That’s where the ghost of former Congressman, Rep. Billy Tauzin (R-LA) emerges.

In 2003, Rep. Tauzin, Chairman of the House Committee on Energy and Commerce was instrumental in shepherding the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA). The MMA was a huge boon for the pharmaceutical industry, which lobbied like crazy to get what it wanted in the bill. Yes, the MMA introduced Part D of Medicare, pharmacy benefits for older Americans. However, it also stuck taxpayers with the bill while continuing to require painful out-of-pocket spending by people on Medicare. Infamously, it created a ban on Medicare negotiation of drug prices. Right after the bill passed, Tauzin left Congress to become executive director of the Pharmaceutical Researchers and Manufacturers of America for an annual salary of $2 million! It remains the quintessential example of a perverse revolving door from government to big industry.

And that brings us back to Senator Burr. One of the complaints among some Republicans on the HELP committee about Becerra is that he’s a lawyer, not a doctor. One of them even said that a lawyer running HHS is like a doctor running the Department of Justice. [I won’t digress on the obtusity of that analogy.] Burr actually juxtaposed Becerra’s experience as weak compared to the “extensive career in the pharmaceutical sector” of Alex Azar, who was president of Eli Lilly USA before becoming Trump’s HHS Secretary. Azar is a lawyer, too!

I can tell you this: it should be illegal for Sen. Burr to work in any way for the pharmaceutical industry for (at the very least) five years after leaving office. He will have lobbying restrictions under federal law, but they do not prevent him from working for Big Pharma when he leaves office. We’ll just have to see.

Whatever happens, Burr will be remembered for that vote to impeach Trump. But here’s a political twist: It’s politicians just like Burr who turned voters against “moderate” Republicans and blindly embrace the nationalist and populist Trump. Burr believes in democracy and capitalism, but wrongly views the needs of multinational corporations as central to America’s success, to the detriment of the majority of citizens. His faith in Big Pharma personifies that troubling reality.

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New Op-Ed in The Hill Advocates Drug Importation and Most Favored Nation Policies

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Gabriel Levitt, President, PharmacyChecker.com and Prescription Justice
Professor Stephen Salant. Professor Emeritus of Economics, University of Michigan

This week, I’m proud to announce that I teamed up with Stephen Salant, PhD, professor emeritus of economics to the University of Michigan, to write an op-ed called “The one-two punch to knock out high drug prices.” Professor Salant was also an economist with the Federal Reserve Board and the Rand Corporation. Our article, published today in The Hill, recommends legislation and regulatory reforms that would promote safe prescription drug importation and implement a most favored nation system of drug pricing for Medicare. The recommendations are based on executive orders from the Trump administration and Democratic legislation from the previous Congress. They should have intense bipartisan support.

Lots of others have written to promote similar reforms, but our article employs new economic theory articulated by Dr. Salant in a paper called Arbitrage Deterrence: A Theory of International Drug Pricing. You can read the op-ed and the paper (if you have strong math skills) but the gist is that: 1) Promoting drug importation, both personal and wholesale would lead to lower domestic but higher foreign drug prices, 2) Simultaneously implementing a strong system for international reference pricing would curtail the aforementioned drug price increases and create a noble cycle of lower and reasonable foreign and domestic prices, and 3) the savings to the U.S. government would be more than enough to subsidize biopharmaceutical research to offset lower R&D investments from drug companies.

Read the op-ed here.

Read Professor Salant’s paper here.

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State Drug Importation Bills Just Got More Personal in California

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With lies and deception, Big Pharma has used the threat posed by rogue websites and counterfeit drugs to push back against U.S. state legislation to gain access to lower drug prices in Canada. Regardless, several states have passed laws toward creating importation programs: Colorado, Florida, Maine, New Hampshire, New Mexico, and Vermont. Simple summary: Canada’s brand drugs are priced much lower and states want access to them. These state laws have largely been confined to wholesale drug importation. That is, until this week when California Assemblymember Sydney Kamlager introduced the Affordable Prescription Drug Importation Act, AB 458. The bill not only calls for wholesale importation from Canada – but also personal drug importation from Canada and other countries, subject to Section 804 of the Food, Drug, and Cosmetic Act. It’s about time!

The bill states:

“This bill would authorize an individual to import a prescription drug only for use by that individual or a member of that individual’s immediate family from a foreign pharmacy if specified requirements are met. The bill would prohibit an individual from, among other things, importing a prescription drug for resale or a controlled substance.”

This is a huge step in the right direction because Americans are already buying medications internationally. Millions have done so from safe international online pharmacies – and the law technically permits this through enforcement discretion, but they should have “express permission.” As I stated in a press release yesterday:

“Assemblymember Kamlager recognizes that millions of Americans are already buying medications internationally because they can’t afford them here… AB 458 gives those people a voice by finally providing them with express permission to do so.”

To date, state laws have strongly relied on model state legislation on drug importation drafted by the National Academy for State Health Policy (NASHP). The NASHP model legislation is focused solely on wholesale importation from Canada and explicitly does not cover personal dug importation. Florida’s law opens the door to importation beyond Canada – but the importers cannot be individuals.

As I understand it, NASHP believes that a regulatory framework for safe wholesale drug importation is more practical. The channel of importation is confined to a wholesaler in Canada exporting FDA-approved drugs to a state-licensed wholesaler in the United States. Drug company scare tactics about rogue websites won’t work here.

You can expect Big Pharma to attack the California bill. The hope is that a real, objective analysis of personal drug importation will occur in the California legislature.  Americans can and do safely buy much more affordable prescription drugs from licensed pharmacies in other countries through travel and ordering online. There’s no gray in that statement. PharmacyChecker’s verifications help by providing them the information to do so safely. The government can and should do this, too.

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Top 60 U.S. Brand Name Drug Prices are 75% Lower Internationally, According to Rand Corporation Study

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Original post found on PharmacyChecker.com.

The Rand Corporation has released an impressive study showing that brand name drugs cost far more in the United States than in other countries – on average 344% more. For those of you looking for a methodologically strong analysis of international drug prices and a history of related studies, this is the report for you. In looking at all drugs, brand and generic, the percentage goes down to 256%. That’s because, as the report shows, generic drugs in the U.S. were found to be priced at 86% of those in other countries. The report was based on drug prices from 2018.

The report’s title is very descriptive of its contents: “International Prescription Drug Price Comparisons: Current Empirical Estimates and Comparisons with Previous Studies”

Explaining the report’s approach in the simplest terms: it accomplishes its main objectives by creating price indices for 32 member countries of the Organisation for Economic Cooperation and Development (OECD) and comparing them for all drugs, brand name and generic. That’s the report’s main focus. It has additional results for other categories, notably biologic drugs and the top 60 drugs in terms of sales. For biologics, which are generally the most expensive prescription products, U.S. prices are on average 295% the international price. For the top 60 drugs by sales, U.S prices are on average 394% higher.

Using some simple math, let’s turn these numbers into percentage savings figures that Americans, who are angry about high drug prices, want to know about. The average savings for brands is 71%; for all drugs (brand and generic), the savings is 61%; for generics, 19% (because U.S. generics are usually cheaper); the average savings for biologics is 66%; and, for the top 60 drugs by sales, 75%.

Rand Corporation – United States vs. International Drug Prices
Category of Analysis U.S. Premium International Savings
Brand Drugs 344% 71%
Overall 256% 61%
Generic Drugs 84% -19%
Biologics 295% 66%
Top 60 Drugs by Sales 394% 75%

It’s that last figure to which I turn my attention now. A key research point of the report is that it is the first substantive, methodologically rigorous analysis of international drug price comparisons in ten years. In short, this deep dive is long overdue. I agree, but other reports in the interim have shown strikingly if not identical results:

In 2019, the Congressional House Ways and Means Committee released a report comparing U.S. prices to those in 11 high-income countries and found that the average savings was 75%! The Committee report looked at the top 79 drugs by sales sold in Medicare. The top 60 drugs by sales category from the Rand report were likely included among these 79 drugs. Those were based on ex-factory prices, meaning the prices charged by drug manufacturers paid by wholesalers, for example.

PharmacyChecker.com looked at online retail prices for those drugs included in the Committee’s reports that are available for sale through retail mail order internationally and found the average potential savings were 72%.

The pharmaceutical industry flacks have already criticized this report for using drug company list prices, which do not include the rebates provided to third parties, most notably pharmacy benefit managers, referred to as net prices. Big Pharma thinks that’s not fair! Here’s a retort. The report actually DOES address net prices and includes an estimate of the price differentials based on additional analysis. Compared to net prices for brand name drugs U.S. prices are still 230% higher than the average of OECD countries. That’s without doing similar adjustments for net prices in any of the other countries. Furthermore, there are about 35 million uninsured and tens of millions more underinsured Americans who are potentially subject to the list price without rebates, so let’s stop pretending that list prices don’t matter.

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Colorado RFP on Drug Importation Accounts for Canada’s Order Protecting Against Shortages

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This week, the Colorado Department of Health Care Policy and Financing issued a request for proposals, called an Invitation to Negotiate, to operate a state wholesale drug importation program as permitted under federal law and the administrative final rule issued by HHS last year, referred to as the Section 804 rule.  Colorado’s proposal request is chock full of details, with many regulatory and legal issues addressed, quite ably predicting pushback from drug companies who virulently oppose importation. Notably, it addresses the Canadian government’s valid concerns about new drug importation channels from the United States aggravating Canadian drug shortages.

Last year, just before the Section 804 rule went into effect, the Canadian government issued an interim order mandating that Canadian wholesale pharmacies not export drugs that could create or exacerbate domestic drug shortages. Certain drugs will require proper supply reporting before approved for export. The pharmaceutical industry’s flawed and, in some cases, false arguments against importation invoking drug safety issues are not working to stop the momentum on Section 804 state programs. In the industry’s public relations and lobbying efforts against the program, they often highlight Canada’s understandable and protective response. That won’t work either.

Colorado’s RFP is clear in its obligation to not cause drug shortages in Canada. A full quote from the proposal is in order here:

“This ITN takes into account the recent Canadian Interim Order that aims to prevent or exacerbate drug shortages in Canada. This order in no way halts the U.S. importation program from moving forward. That said, Colorado has always intended to take any Canadian drug shortages into account when identifying drugs for importation and have expressed this sentiment to the Canadian government through their Colorado-based consulate. We will ensure that all supply chain partners abide by this Order…”

In the coming year, Colorado and vendors that it hires will create lists of eligible drugs for wholesale import, ensuring only substantial savings for the State and its residents—not aggravation of Canadian drug shortages.

Colorado now joins Florida as the second state to announce requests for proposals on wholesale drug importation programs. Four others — Maine, New Hampshire, New Mexico, and Vermont — have passed laws to permit wholesale drug importation from Canada. These programs have yet to be approved through the HHS.

I’m glad to see Colorado’s diplomatic and practical approach in ensuring that Canada’s concerns about shortages are addressed. It provides a blueprint for other states to follow on this front.

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Drug Importation Under Biden? | PharmacyChecker Blog

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Drug importation, by which I mean the process of buying much less expensive and equally safe prescription drugs from other countries, may see more sunlight under the Biden administration. For many drugs, the prices are frequently 90% less in other countries. Biden included drug importation among several policies he plans to pursue to lower drug prices. There’s momentum on drug importation from the Trump administration in the form of:

  1. An executive order calling for drug importation
  2. A final rule by the U.S. Food and Drug Administration to allow wholesale importation from Canada
  3. A request for proposal for personal drug importation programs
  4. a request for proposals relating to the importation of Insulin

The question remains if Biden will prioritize these initiatives. The political and policy climates are favorable for him to do so. Importation is broadly popular among Republicans and Democratic voters. Lowering drug prices is a central health care concern in America. Drug importation has incredible potential as an effective policy to end the price discrepancies Americans face with other citizens in other high-income countries.

Veterans of this issue like me are sensitive to the history here from the Obama-Biden years. Obama famously made a deal with Big Pharma in which his administration backtracked on plans to reform drug importation laws and allow Medicare to negotiate with drug companies to lower drug prices. In exchange, Big Pharma supported Obamacare and helped secure its passage. Caving to Big Pharma is politically deadly and the Democrats will have less appetite to do so now than they did in 2009.

Finally, Biden’s call for unity, which I strongly support and admire, is at play here. Almost all voters want to see action on drug prices generally, and that includes importation. In drug importation, Biden finds a cause for all Americans to get behind.

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Twitter’s Trump Ban and Big Pharma’s Online Censorship

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For someone who believes that Donald Trump’s actions, especially recent ones, have threatened the core of our democracy, it’s difficult to admit that the Twitter ban against him strikes a nerve with me. Getting right to the point: in the summer of 2018, Instagram shut down PharmacyChecker’s account. PharmacyChecker, which I co-founded in 2002, is a small, independently-funded online pharmacy verification and drug price comparison website. One of its claims to fame is providing information for consumers that can help them safely obtain lower-cost prescription drugs from other countries. PharmacyChecker helps people avoid rogue pharmacy websites and save money. So why did Instagram shut it down?

Germane to the matter is the fact that under most circumstances federal law prohibits the importation of prescription drugs for personal use. However, federal law makes many allowances to permit it anyway, despite the prohibitions. Tens of millions of Americans have imported medicines for personal use and none have been prosecuted for doing so. PharmacyChecker does not import, sell, distribute, process orders for medication in any way. It provides information. That information may be controversial but it’s not illegal. Nonetheless, it poses a threat to the pharmaceutical industry, which needs Americans to pay the highest prices on drugs to maintain their incredible profit margins. You see where this goes.

As I wrote two years ago about this…

“The pharmaceutical industry, generally, does not like our company [PharmacyChecker]. As an extension of that feeling, the FDA doesn’t love us either. Basically, we are in Big Pharma’s crosshairs because the information we provide helps people find more affordable medicines from other countries and import them for personal use.

But is that a reason for Instagram to shut down our account!? That action is nothing less than corporate-inspired, government-encouraged censorship.”

Consequently, PharmacyChecker later filed a lawsuit against several organizations and companies funded by or allied with large pharmaceutical companies through trade associations or non-profit organizations. It alleges that such groups have illegally colluded to suppress PharmacyChecker’s information by corralling large Internet companies to do their bidding.

As I write this, if you go to the search engine Bing and search for PharmacyChecker, you’ll find a pop-up warning next to organic search results, which blocks the link to PharmacyChecker.com. Why? PharmacyChecker is on a list of “Not Recommended Sites” published by the National Association of Boards of Pharmacy through a program it runs that was funded with a grant from Pfizer.

These pharmaceutical industry actions are extralegal against PharmacyChecker and flout norms of due process. This is a similar argument that Trump is making against Twitter.

Twitter’s position is that the information published by Trump violates its Glorification of Violence Policy. Twitter states: “We have permanently suspended the account due to the risk of further incitement of violence.” I’m sympathetic to that position. However, Twitter is a private company, which has the power to substantially curtail the ability of the U.S. president to communicate, and that scares me. Let’s flip this…

In 2018, Twitter suspended the accounts of 80 left-leaning activists from the Occupy Movement with a social network of 5 million people, according to Wired Magazine. Twitter did not give a reason.

Instagram has the ability to shut down accounts of businesses and people without giving them a reason or with any viable due process opportunity. Bing can post warnings against websites because its commercial interests may be intertwined with doing so, even if it’s wrong. Google can delist websites from its search engine with no accountability. Etc. Don’t even get me started on Facebook (which of course owns Instagram).

I’m not saying we should allow any content on the Internet. Not at all. Child porn; terrorist networks; and drug dealer websites are all quintessential examples. Should Twitter allow the leader of a country to lie to tens of millions of people in a manner that leads them to anger and violence?  I don’t think so. But there needs to be standards and accountability; without them, such actions to protect our democracy will surely undermine it.

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Drug Prices Are Up Again in 2021 and Canada’s PMPRB is On My Mind

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This week the prices of over 500 drugs went up in America, according to drug price transparency non-profit organization 46Brooklyn. This happens every year, usually coinciding with shouts of anger and disgust with the pharmaceutical industry’s greed. The shouts are muted this year, probably because, like it or not, we’re counting on Big Pharma to manufacture enough Covid-19 vaccines to end the pandemic. But the battle against high drug prices continues. Godspeed.

The median price increase reported was 4.6%, slightly lower than last year’s increase but about eight times the estimated inflation rate for 2020 of 0.62%. If you’re thinking I’m going to start talking about importing drugs from Canada now, you’re wrong – as helpful as that remains for Americans who go that route individually. [There’s an importation surprise at the end of this post for you, however.]

I’m thinking about the public health prism through which Canada views drug prices. I like the sound of that. Public health prism. What the hell does that mean? Well, I was perusing the updated guidelines on drug prices published by Canada’s Patented Medicine Prices Review Board (PMPRB) and one sentence stood out:

“The PMPRB’s existence as the only sector-specific price ceiling regulator under the Act reflects a recognition by policy makers that the unfettered ability to set prices for patented medicines is not in the public interest given the unique harm that can ensue if consumers are made to pay excessive prices for them.” 

The public health prism through which Canada views drug prices is one where “the unfettered ability to set prices for patented medicines is not in the public interest.” The PMPRB is a quasi-governmental entity tasked with preventing excessive drug prices in Canada. Its creation was mandated under Canada’s Patent Act, as amended in 1987, and it is independent of Health Canada. Notice the phrase “set prices”. Whatever drug price increases happen in the U.S. – and they are slower than last year – drug companies set prices way higher in the U.S. than in Canada. The harm to Americans is unique in that due to these high set prices, we forego filling prescriptions at rates far higher than in any other high-income country.

It may surprise you that Canada’s drug prices are higher than in most other countries. They are done with that. One of the main mechanisms for preventing excessive drug prices in Canada is to set prices based on the average prices among a basket of other high-income countries, referred to as international reference prices. Last year, the PMPRB dropped the U.S. and Switzerland from the basket of countries, the only countries with higher drug prices on average than Canada, and added countries with lower prices: Australia, Belgium, Japan, the Netherlands, Norway, and Spain. The PMPRB11 basket of countries now includes Australia, Belgium, France, Germany, Italy, Japan, the Netherlands, Norway, Spain, Sweden, and the United Kingdom.

The idea for creating a drug price review board in the United States is not new. In 1993, former Congressman Pete Stark (D-CA) introduced the aptly called Prescription Drug Prices Review Board Act of 1993.Apparently, the Clinton administration was supportive of the idea at the time, but according to the New York Times form 1993, “under heavy lobbying by the drug industry, the Administration has apparently backed away from the idea…”

Flash forward 23 years: Congresswoman Rosa DeLauro (D-CT) introduced the Prescription Drug and Medical Device Price Review Board Act of 2016 (H.R. 6501). The bill would establish the U.S. version of the Canada’s PMPRB. Its summary states:

“The board must establish a formula for determining whether the average manufacturer price of a prescription drug or medical device over an annual quarter is an excessive price.”

The bill has a special treat for Americans who believe they simply should not pay higher prices for drugs than in other countries. The bill states that the board “shall promulgate regulations permitting individuals to safely import from an approved country into the United States prescription drugs, and devices, that are comparable to prescription drugs, and devices, for which the Board makes a final determination that the manufacturer is charging or has charged an excessive price in violation of section 5(a) of the Prescription Drug and Medical Device Price Review Board Act of 2016.”

Could we get this type of legislation across the finish line?

Yes, Georgia’s on my mind, too…

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Good Judgement; Bad Judgment on Personal Drug Imports

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Here’s a kind of funny story to end the year with. I make a big deal on these pages about the decriminalized reality of personal drug importation. Federal law prohibits under most circumstances importing prescription drugs for your own use, but people are never busted for it. I’ve been around this a long time and I mean never. But that’s for personal use only. Recently, 20 U.S. air marshals in Dallas, Texas were disciplined for “smuggling” Viagra into the United States. They bought it at lower prices outside the U.S., brought it back, and gave it to their colleagues or sold it for a “small profit,” as reported in Yahoo News. So, are they in any real trouble?

It appears the answer is not really—at least not yet. The names of the air marshals are not public because they have not been charged with a crime. Some were suspended for a few days. One resigned. No one was terminated. However, two may be terminated based on “evidence uncovered during the investigation.” I would guess that those two were dabbling in the resale of stronger pharmaceuticals.

The scandal is referred to as “Bonergate”. The main thrust of the news coverage is that many of the 3,000 air marshals tasked with protecting flights from terrorism in the wake of 9-11 have been outed for various misdeeds. I’m going to remain agnostic on that issue. One comment made by Bill Beller the air marshal chapter president for the Federal Law Enforcement Officers Association is worthy of note:

“We have pride in our positions, and some people — whatever they did — I believe it was an error or error in judgment…”

Maybe. In contrast, Americans are using good judgment when buying medications for their own use from other countries because they can’t afford it here, as long as they do so wisely from licensed sources and possess a prescription for those medications. Bonergate may be funny, but the laws that curtail safe personal drug importation are no joke. Especially not to the millions of Americans who have to skip medications each year due to domestic costs. Big Pharma, on the other hand, is laughing all the way to the bank.

Happy New Year.

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Wishing You More Affordable Medicine This Christmas

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With some stops and starts, this blog has become far more focused on policy, regulatory matters, law and politics — and less on everyday consumer issues relating to drug prices. With Christmas upon us, I want to extoll PharmacyChecker.com’s simple core mission: make it easier for Americans to pay for their prescription drugs. Ask PharmacyChecker, the consumer journalistic section of PharmacyChecker, has a great piece up today called The Gift of Low Drug Prices. It speaks volumes about that mission.

Merry Christmas, America. 

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